Pfizer's first-quarter revenues disappoint

New drugs spurred along by research at Pfizer Inc. laboratories in Groton couldn't provide enough lift to make up for losses in the company's established portfolio as the firm announced disappointing first-quarter financial results Tuesday.

The drug giant, which has its largest worldwide research-and-development site in Groton, reported profits of $2.75 billion for the first three months of the year, a 53 percent increase from the same period last year. But the New York-based company lowered its projected earnings for 2013 as it noted a 9 percent reduction in revenues quarter over quarter, with lower sales of its cholesterol blockbuster Lipitor and vaccine Prevnar accounting for much of the revenue miss.

Pfizer's stock price fell about 4.5 percent Tuesday on the New York Stock Exchange. The price of $29.07 a share was $1.36 off Monday's close.

The lower sales figures were reported as Pfizer begins to wind down a major restructuring that led to dramatic reductions in the company's R&D expenses over the past two years. The more than $2 billion in cutbacks were felt locally as the company eliminated 1,100 local positions, but Pfizer Chief Executive Officer Ian Read said during a webcast that he didn't see R&D spending increasing any time soon.

"We're very confident with our capital allocation," Read said. "We think we have the right balance allocated to research right now."

Read and other Pfizer executives touted a wave of new drug approvals over the past few years that have included rheumatoid arthritis pill Xeljanz and cancer drug Xalkori, which were both developed locally during a period of higher R&D spending. The local labs used to be Pfizer's research hub, but the company announced two years ago that its drug-discovery operations would be moved to Cambridge, Mass., leaving Groton as the center of all the scientific work needed to bring a new drug to market.

While officials were happy with inroads being made by its newest drugs, some of the older medications showed weakness. Lipitor sales were off 86 percent in the United States during the first quarter and 55 percent worldwide compared with revenue generated in the first three months of last year.

Overall, the first-quarter earnings reported appeared stronger than they really were because the same period last year had been weighed down by $450 million in legal expenses as well as costs associated with worldwide downsizings. The legal costs last year related to Brigham Young University's lawsuit over rights to pain medication Celebrex as well as a settlement with patients who sued over the safety of the hormone-replacement therapy Prempro.

Despite the quarterly revenue dip and 6-cent reduction in projected earnings per share for the year, CEO Read said in a statement that the company remains in good shape.

"We are clearly seeing the benefits of the investments we've been making in our innovative core," he said.

The report noted a 3 percent reduction in quarterly R&D expenses. But adjusted earnings per share were 54 cents, down 3 cents a year ago, and Pfizer lowered its full-year forecast to show profits of $2.14 to $2.24 a share.

Frank D'Amelio, Pfizer's chief financial officer, said in a webcast that all of the reduction in the company's financial guidance was related to a stronger U.S. dollar reducing foreign revenues.

"Had foreign-exchange rates remained constant, we would be reaffirming our ... guidance," he said.

D'Amelio also pointed out that Pfizer has returned about $8 billion to shareholders in dividends and share repurchases, with other similar investments yet to come.